On 27th October, Chancellor of the Exchequer, Rishi Sunak, unveiled the government’s 2021 Autumn Budget, a much-anticipated announcement that outlined what will be in place to ensure the UK economy recovers from the challenges that the COVID-19 pandemic has thrown at it.
For the contracting industry, the pandemic, Brexit and the introduction of IR35 reforms for the private sector over the past 18 months have weighed heavily on the way in which they carry out work. Therefore, there were hopes that the Budget would contain good news. And, for the most part, it certainly delivered for contractors. According to the Chancellor, the economy will return to its pre-COVID state by 2022 and national debt is forecasted to fall in the next five years.
Below, we take a look at some of the key points from the Autumn Budget that will affect contractors.
No mention of IR35
Since IR35 reforms were introduced in April of this year for medium to large businesses, the contracting industry has been waiting with baited breath for HMRC to suggest this will be extended to include small businesses also. The fact that there was no mention of IR35 during the Budget means that the government does not (yet!) have plans to extend reforms, a huge relief to countless organisations and contractors throughout the UK we’re sure.
Fuel duty freeze
A planned rise in fuel duty has been cancelled, meaning that it has been frozen for the 12th consecutive year.
Increase to minimum and living wage
For contractors on lower hourly rates, a fairly significant increase to minimum and living wage is a welcome announcement. From April 2022, the following changes will come into force:
- National Living Wage (23+) – Rising from £8.91 to £9.50 an hour
- National Minimum Wage (21-22) – Rising from £8.36 to £9.18
- National Minimum Wage (18-20) – Rising from £6.56 to £6.83
- National Minimum Wage (Under 18s) – Rising from £4.62 to £4.81
Increase to NIC
Announced prior to the Budget, from April 2022 there will be a 1.25% increase to NIC deductions and dividend tax rates.
If you have any queries on how the announcements made in the Autumn Budget will impact you, speak to the Exchequer team today on 01244 500 195.